Tag: middle class

Baffled by the middle class debate? Here’s some background about Canadian Middle Class prosperity beating out the US

~ MilesCorak ~ 2 Comments

If you are interested in more details about the commentary I wrote for today’s Toronto Star, “The Inequality Debate: Canada’s middle class is losing ground,” you can find the original version in this post. You might also have an interest in this post, imaginatively entitled: “Who are the middle class?”

A number of journalists have recently addressed the topic, nicely offering a broader perspective. Whether you like to listen, watch, or read, you have some good choices.

Listen to this Ira Basen documentary called “What We Talk About When We Talk About The Middle Class,” which was broadcast on CBC Radio’s program “The Sunday Edition”; watch this documentary by Holly Doan for CPAC, which also features the much-cited New York Times article (look down the right column of the page to find it as “Vote 2015 Special: The Middle Class”); or read this Globe and Mail article, “The Middle Class: Just Who are They, Anyways?” by Erin Anderssen.

I hope all this helps to inform you about the talking point that, by waving around a New York Times article, leads our policy makers to dismiss the very fundamental and long-standng changes in the nature of work and incomes that are generating more insecurity for many Canadians, particularly young Canadians.

Who are the middle class?

~ MilesCorak ~ 10 Comments

slice of pieOne economist recently suggested that there are as many as 156 definitions of the middle class. If this statistical potluck isn’t complicated enough, pollsters also tell us that a very large fraction of the population describe themselves as “middle class.”

You can see why politicians have made the “middle class” an election issue, but also why they might hesitate to answer the question: “Who are the middle class?”

It isn’t a contradiction for many people to feel they are in the “middle” even if their incomes are well above average or well below. There’s a certain truth to this because most Canadians share a set of common concerns that go beyond just their incomes.

You are “middle class” if you aspire to a better tomorrow, and have a hope for growth and progress in your circumstances; you are “middle class” if you are struggling with uncertainty, and worried if you and your family will be able to weather the storms that tomorrow will surely bring; and you are “middle class” if you have an expectation that your children should be treated fairly once you have done all you can to help them.

But while many people share these three concerns, their circumstances and capacities to manage them differ, something that is the result of growing inequality in access to secure and well-paying jobs.

Ninety percent of the population may belong to the “middle class”, but that doesn’t mean there is a one-size-fits-all-policy.

One way to get our heads around this is to let the answer to “Who are the middle class?” fall out of an answer to another question: “How is the economic pie divided?”

Continue reading “Who are the middle class?” →

Middle incomes, oil prices, and the fickle promise of prosperity

~ MilesCorak ~ 1 Comment

You could almost hear the air rushing out of a political agenda tailored around middle class malaise immediately after The New York Times published a story last April called “The American Middle Class Is No Longer the World’s Richest.” Here, with hard data, was that bastion of liberal thinking showing that the Canadian middle class was about to overtake the American on its way to becoming the richest in the world.

click on image to enlarge
Source: David Leonhardt and Kevin Quealy (2014). The New York Times. April 22nd.

The story made the talking points of the federal opposition parties—that the Canadian middle class was under threat, not well served by current government policy, and in need of something better—look more like limp balloons on the floor of a party that’s gone on too long, than a front line of battle ready troops about to seize power.

Trouble is, the claim that the Canadian middle class was doing better than the American lost sight of deeper trends. All bets are off now that oil prices have plunged, but the revised talking points of politicians are still no better at focusing on the underlying drivers of prosperity.

Continue reading “Middle incomes, oil prices, and the fickle promise of prosperity” →

Two stories about inequality

~ MilesCorak ~ 5 Comments

In many rich countries the “hard” facts describing the income distribution are easily available. Yet, discussions about inequality are animated by two different stories with very different public policy implications.

You can listen to a caricature of these points of view in this pair of interviews on CBC radio: http://www.cbc.ca/radiowest/2015/01/21/two-different-takes-on-the-worlds-wealthiest-one-per-cent/

I offer more detail on the way Canadians have framed these stories as a part of a presentation to the School of Policy Studies at Queen’s university.

Here is Story 1 in pictures

(click on an image to start the slideshow and press Escape to return to this page).

Here is Story 2 in pictures

(click on an image to start the slideshow and press Escape to return to this page).

My presentation argued that context—rooted in economic theory and the appropriate use of statistics—is needed to understand the truth behind these stories, and to turn them into a conversation useful for public policy.

Here is the full set of slides I used.

Corak_Two_Stories_about_Inequality_and_Public_Policy_presentation_to_Queens_University_February_5_2015

An American idea about the Canadian middle class

~ MilesCorak ~ 12 Comments

The suggestion that the middle class is stagnating, the linchpin of Justin Trudeau’s economic platform—to the extent it exists—is an idea shamelessly borrowed from the United States.

Shameless it may be, but it is, nonetheless, true.

Clearly there are some ways in which we are all better off not withstanding what President Obama tells the American public, and notwithstanding how closely Canadian political leaders listen to him.

In 1980, a cell phone was something carried in a brief case; and a Sony Walkman—you surely recall the portable cassette player the size of a thick paperback that strapped “conveniently” to your belt?—was the cutting edge musical accessory.

But shops filled with more variety, and more quality, make us and our kids better off only to a degree, and not only because the power to blow your ear drums out has increased exponentially.

In 1980 middle-income Canadian families reported a total of $57,000 on their tax returns, and 30 years later, … well exactly $57,000.

Continue reading “An American idea about the Canadian middle class” →

The simple economics of the declining middle class — and the not so simple politics

~ MilesCorak ~ 13 Comments

ChristieFreelandPlutocrats

The middle class is declining, or is it?

The question has taken on increased resonance in Canada since two respected and informed journalists—Chrystia Freeland and Linda McQuaig—have decided to enter politics.

Ms. Freeland is the author of Plutocrats: The Rise of the New Global Super Rich and the Fall of Everyone Else, and Ms. McQuaig a co-author of The Trouble with Billionaires.

Income inequality is what they know, and presumably what they feel should be a matter of public policy.

If the middle class is not shrinking then the policy program these individuals have to offer, and by reflection some of the policies of the political parties they hope to represent—the traditionally centrist Liberal Party in Ms. Freeland’s case, and the social democratic New Democratic Party in the case of Ms. McQuaig—are brought into question.

linda_mcquaig.jpg.size.xxlarge.letterbox

And that is what a number of observers have already done, arguing that the facts show the Canadian middle class is not under threat, and that those who argue otherwise—like Ms. Freeland and Ms. McQuaig—are spending too much time looking at American trends.

So this is an economic fact with some political impact.

My look at the numbers focuses on both incomes (the total amount of money a family brings home) and on wage rates (the hourly rate of an individual’s pay).

The trend in incomes is disturbing, but all the more so when viewed in light of a polarizing pattern in wage rates. These trends should be a real concern for public policy, and in my view a focus on other countries, particularly the United States, is one important way to constructively inform that concern.

Continue reading “The simple economics of the declining middle class — and the not so simple politics” →